Monetary Equilibria with Indivisible Goods

Benoit Julien, Asgerdur Petursdottir and Liang Wang
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Asgerdur Petursdottir: UNSW Australia

No 201428, Working Papers from University of Hawaii at Manoa, Department of Economics

Abstract: This paper uses a New Monetarist framework to study the trade of indivisible goods with divisible money in a frictional market. We first derive conditions under which stationary equilibrium exists, and then show that if equilibrium exits, it is unique. The uniqueness result is due to the commitment and coordination nature of the pricing mechanisms. Money is superneutral in the model with generalized Nash bargaining, but not with competitive search. Because of the superneutrality of money, monetary equilibrium in the generalized Nash bargaining model only exists for low values of nominal interest rate. With competitive search, monetary equilibrium exists for all i > 0

Keywords: Nash Bargaining; Competitive Search; Indivisibility; Multiplicity; Uniqueness (search for similar items in EconPapers)
JEL-codes: D51 E40 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2014-10
New Economics Papers: this item is included in nep-dge, nep-ias and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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